Advancis closes $27 million private placement; volume suffers on lower stocks

By Sheri Kasprzak

Atlanta, April 26 - Advancis Pharmaceuticals Corp. was the headliner in the private placement market Tuesday with word that it has closed a $27,064,000 offering of stock.

The company sold 6.8 million shares at $3.98 each to institutional investors.

The investors will also receive warrants for 2.4 million shares, exercisable at $4.78 each for five years.

"It's in line," said one market source who had seen the deal. "Keep an eye out for their [fourth quarter] earnings."

The company will release its fourth-quarter earnings report Wednesday.

After the deal was announced Tuesday morning, the company's stock lost $0.11 to close at $3.87.

Lehman Brothers Inc. was the placement agent in the deal.

"We are delighted to have expanded our investor base with the addition of sophisticated biotech investors," said Edward Rudnic, the company's chairman, president and chief executive officer, in a statement.

"We are also grateful of the support of our existing investors and pleased to have completed this financing in a very short timeline.

"This financing strengthens our balance sheet, providing sufficient capital to fund our operations well into 2006, and allows us to further our product development efforts in advance of our Amoxicillin Pulsys commercialization plans. In addition, it gives us financial flexibility as we negotiate potential future marketing arrangements and other license collaborations."

Based in Germantown, Md., Advancis is a pharmaceutical company focused on developing anti-infective products. The proceeds will be used to complete the company's ongoing phase III trials and to prepare for the commercial launch of Amoxicillin Pulsys. The remainder will be used for continued product development and for working capital and general corporate purposes.

Elsewhere, sell-siders said volume Tuesday took a hit thanks to both lower stocks and lower oil prices.

"Sometimes you'll see oil prices go down and stocks go up, which means some companies may be more willing to get their deals out there," said one sell-sider in the U.S. "Today, you had lower stocks, lower oil prices, it just really wasn't the day to price."

The Dow Jones Industrial Average closed down 91.34 at 10,151.13; the Nasdaq composite index lost 1,927.44 and the S&P 500 dropped 10.36 to end at 1,151.74.

Oil prices dropped $0.37 to close at $54.20 per barrel.

"Stocks did have something to do with it [lower volume]," said another sell-side source.

Millennium Cell raises $10 million

Millennium Cell Inc. had completed a $10 million private placement of convertible preferred stock with institutional investors.

The series C preferreds pay annual dividends of 7% and are convertible into common shares at $2 each.

The investors will also receive warrants for common shares equal to 25% of the preferreds issued in the offering. The warrants are exercisable at $2 each for three years.

H.C. Wainwright & Co., Inc. was the placement agent.

"Today's announcement of this successful financing will enable us to further build on the recent momentum established in our business," said David Ramm, the company's chief executive officer, in a statement. "With this additional capital and continued support from our commercial partners and federal government agencies, we look forward to realizing our goal of broad military and commercial availability of hydrogen batteries based on our technology."

Based in Eatontown, N.J., Millennium develops hydrogen battery technologies.

The company's stock closed down $0.15 at $1.40 Tuesday.

Hana wraps $4.8 million deal

Hana Biosciences, Inc. has wrapped a $4,833,400 private placement of stock.

The company issued 3,776,094 shares at $1.28 each to institutional investors.

The investors also received warrants for 1,132,828 shares. The details of the warrants could not be obtained by press time Tuesday.

Griffin Securities, Inc. was the placement agent in the deal.

"This financing enables us to continue to drive our diversified, clinical-stage oncology pipeline forward," said Mark Ahn, the company's president and chief executive officer, in a statement.

"Talotrexin recently initiated phase I/II for non-small cell lung cancer, and will shortly begin trials for relapse adult acute lymphocytic leukemia. We are also on track to move Ondansetron lingual spray, a treatment of chemotherapy-induced nausea, into pivotal trials. In addition, we soon will begin phase I clinical trials of IPdR, our radiosensitizer, in pancreatic, colorectal and liver cancers."

Based in San Francisco, Hana is a biopharmaceutical company focused on treatments for cancer.

Hana's stock closed up $0.05 to close at $1.60 on Tuesday.

GelStat raises $1.7 million

GelStat Corp.'s stock took a hit Tuesday after the company announced it closed a private placement for $1.7 million.

The company sold 1,214,285.71 shares at $1.40 each.

"The price per share was a decent discount when the deal priced," said one market source. "GSAC's [GelStat] stock has been trending downward since its earnings report came out last week. I'd say the fact that they were able to finish the deal and raise close to what they set out to raise is a good sign, especially given the drop in their stock."

The company had originally set out to raise $2 million.

GelStat's stock dove $0.30 or 25.21% to close at $0.89 on Tuesday after the closing was announced in the morning.

Thomas Securities LLC and Banner Capital Markets LLC were the placement agents in the deal.

Based in Minneapolis, GelStat produces consumer, over-the-counter health products. The proceeds will be used for marketing and general corporate purposes.

Matrix's stock closes down

A day after announcing the closing of a $30 million private placement of convertible notes, Matrix Service Co.'s stock took a dip.

The company's stock closed down $0.06 at $3.98 after gaining $0.11 to close at $4.04 on Monday.

The notes are convertible into common shares at $4.69 each.

"I honestly don't think the converts had anything to do with it [the drop in stock]," said one market source following the offering. "I just think it's the broader market, stocks in general were down, and to be fair, it was only a small slide, so I wouldn't worry too much about it."

Based in Tulsa, Okla., Matrix provides industrial construction and repairs for the petroleum, petrochemical, bulk storage terminal, pipeline and industrial gas industries.

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